Summary of Statement No. 112

Employers' Accounting for Postemployment Benefits—an amendment of FASB Statements No. 5 and 43 (Issued 11/92)


This Statement establishes accounting standards for employers who provide benefits to former or inactive employees after employment but before retirement (referred to in this Statement as postemployment benefits). Postemployment benefits are all types of benefits provided to former or inactive employees, their beneficiaries, and covered dependents. Those benefits include, but are not limited to, salary continuation, supplemental unemployment benefits, severance benefits, disability-related benefits (including workers' compensation), job training and counseling, and continuation of benefits such as health care benefits and life insurance coverage.

This Statement requires employers to recognize the obligation to provide postemployment benefits in accordance with FASB Statement No. 43, Accounting for Compensated Absences, if the obligation is attributable to employees' services already rendered, employees' rights to those benefits accumulate or vest, payment of the benefits is probable, and the amount of the benefits can be reasonably estimated. If those four conditions are not met, the employer should account for postemployment benefits when it is probable that a liability has been incurred and the amount can be reasonably estimated in accordance with FASB Statement No. 5, Accounting for Contingencies. If an obligation for postemployment benefits is not accrued in accordance with Statements 5 or 43 only because the amount cannot be reasonably estimated, the financial statements shall disclose that fact.

This Statement is effective for fiscal years beginning after December 15, 1993.